- Estes Hills Elementary
School Budget “Cliff”: A Message from the CHCCS Board of Education
In the new CHCCS Strategic Plan 2027, a key priority is Equitable and Transparent Fiscal Stewardship and Operations, with three goals, the last of which is “CHCCS will provide timely, accurate and transparent communication and reporting of financial information to our community.” In that vein, this summary will provide information about the long term financial outlook for the district as relates to the funding both approved as well as requested from the Orange County Board of County Commissioners (BOCC).
On Thursday evening, September 29, the BOCC held a joint work session in Hillsborough with Chapel Hill-Carrboro City Schools and Orange County Schools. Three items under discussion (but not for a vote or other official action) were an update on school budgets, school safety, and a School Capital Needs Work Group report. This summary will focus on the school budget update.
After brief opening remarks, CHCCS Board of Education Chair Deon Temne introduced Board member Riza Jenkins, who chairs the Board’s Finance and Facilities Committee. Jenkins’ remarks represented the full Board and Superintendent Nyah Hamlett.
Jenkins said, “...all 20 of our schools met or exceeded their growth targets this year. We have an all-time high graduation rate. And 83% of our schools are earning “A” or “B” grades on their state report cards, compared to just 23% of schools statewide. Our staff and our students are putting in the work, and they’re getting incredible results that should make all of us proud. We’d like to recognize and express our gratitude to Orange County and the Board of County Commissioners in providing many of the resources that make those results possible.”
But Jenkins then addressed an essential challenge faced by CHCCS as it looks to the future for planning next year’s budget and beyond, alluding to a metaphorical “cliff” in the not-so-distant future.
First, the brief backstory: CHCCS ended the 2022 fiscal year with a total local fund balance of approximately $11.9 million. A fund balance is the cushion or safety net that school districts maintain for emergencies, like a “Rainy Day Fund”. But as Jenkins explained, “the problem is our fund balance is running out, and we need to address this now before it’s too late.”
Why is it running out? “Just a few months ago -and in years prior - CHCCS sat in these chairs and received direction from the County Commissioners to spend down our fund balance to increase employee compensation in the upcoming budget year,” she said. “So that’s what we did. 85% of our budget is dedicated to personnel. That $5 million [spent from the approximate $11.9 million fund balance] was well-worth the one-time investment in our staff, and our staff is grateful that we continue to be leaders in terms of employee compensation.” Now, Jenkins pointed out, “We find ourselves in a $5 million structural deficit” which means a recurring budget shortfall, unless action is taken. Jenkins said, “We understood the BOCC would be our [financial] backstop - we took you at your word.”
Jenkins explained that these new pay raises for all staff are not just ‘one time’. They are annual, recurring expenses that need a [new] consistent funding source. “Because we used our fund balance to pay for raises [and other state requirements], we estimate that we have only $5.3 million in unassigned, unreserved fund balance remaining at this time, which won’t cover the same expenses for future budget years. Like I said, we are heading toward a cliff.”
Jenkins continued with the Board of Education’s request: “The CHCCS Board of Education is requesting approximately $5 million in county allocation [annually in future budget years, starting with 2023-24] to make ourselves whole. Without that, we’ll be headed down a new road that no one wants to travel.” Jenkins, on behalf of the Board, then posed three hypothetical alternatives for the Commissioners to consider:
- “Would the Board of County Commissioners really ask Chapel Hill-Carrboro schools to make cuts that directly impact children?”
- “Would the Board of County Commissioners really suggest an increase in the special district tax, which shouldn’t be used to supplant the county’s obligation to the staff and students of our school district?”
- “Would the Board of County Commissioners really go back on its word that you would stand behind us and be our backstop?”
In concluding her remarks, Jenkins said, “Let us be clear: Because of the action we took, based on the direction you [the BOCC] gave, we face the possibility of cutting services and positions a year from now that will directly impact students. We can stop [that] conversation now. Let’s work together and make good things happen for the students of Chapel Hill, Carrboro and Orange County by using available county resources to fill the gap that our staff, students, and families were promised would be filled.”
While no official action was taken at the work session, this summary of the Board of Education’s message is an important step in providing timely information to the CHCCS community, so that stakeholders can be aware of a fundamental financial challenge now, instead of at the height of “budget season” next spring.
- To watch and listen to the full remarks and ensuing discussion, visit the Board of County Commissioners webpage and click on "video" for the Sept. 29 meeting.
- Read the Board of Education's Sept. 15 Letter to Orange County Board of County Commissioners
- CHCCS Strategic Plan 2022: Think (and Act) Differently